Poverty Traps With Local Allocation Tax Grants In Japan

Takero Doi

doi:10.1111/j.1468-5876.2010.00519.x

Poverty Traps With Local Allocation Tax Grants In Japan

Takero Doi

Faculty of Economics

Research output: Contribution to journal › Article › peer-review

4 Citations (Scopus)

Abstract

This essay investigates poverty traps related to Local Allocation Tax (LAT) grants in Japan. LAT grants, which are transfers of funds from the central government to local governments, make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. Using a simple dynamic model, we show that LAT grants lower regional income and are a disincentive to localities to increase their estimated tax revenue. Using panel Granger (non-)causality tests, we find empirical support for asserting that there are poverty traps due to the LAT grants in Japan.

Original language	English
Pages (from-to)	466-487
Number of pages	22
Journal	Japanese Economic Review
Volume	61
Issue number	4
DOIs	https://doi.org/10.1111/j.1468-5876.2010.00519.x
Publication status	Published - 2010 Dec

ASJC Scopus subject areas

Economics and Econometrics

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abstract = "This essay investigates poverty traps related to Local Allocation Tax (LAT) grants in Japan. LAT grants, which are transfers of funds from the central government to local governments, make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. Using a simple dynamic model, we show that LAT grants lower regional income and are a disincentive to localities to increase their estimated tax revenue. Using panel Granger (non-)causality tests, we find empirical support for asserting that there are poverty traps due to the LAT grants in Japan.",

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AB - This essay investigates poverty traps related to Local Allocation Tax (LAT) grants in Japan. LAT grants, which are transfers of funds from the central government to local governments, make efforts for enhancing regional economic growth, due to the calculation of the LAT grants. Using a simple dynamic model, we show that LAT grants lower regional income and are a disincentive to localities to increase their estimated tax revenue. Using panel Granger (non-)causality tests, we find empirical support for asserting that there are poverty traps due to the LAT grants in Japan.

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